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The Rise and Fall of Armies

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  • Jonathan J Adams

    () (Department of Economics, University of Florida)

Abstract

For a thousand years, income growth was associated with a rising military employment share. But this share peaked in the early 20th century, after which military employment shares fell with income growth. I argue that rising military shares were driven by structural change out of agriculture, and the recent declines are driven by substitution from soldiers towards military goods. I document evidence for this substitution effect: as countries' incomes rise, the ratio of their military expenditure share to their military employment share rises too. I introduce a game theoretic model of growth and warfare that reproduces the time series patterns of military expenditure and employment. The model also correctly predicts the cross-sectional pattern, that military employment and expenditure shares are decreasing in income during wars. Finally, I show that faster economic growth can reduce military expenditure in the long run.

Suggested Citation

  • Jonathan J Adams, 2017. "The Rise and Fall of Armies," Working Papers 001002, University of Florida, Department of Economics.
  • Handle: RePEc:ufl:wpaper:001002
    as

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    File URL: http://users.clas.ufl.edu/adamsjonathan/files/riseandfall.pdf
    File Function: First version, 19-05-2017
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    References listed on IDEAS

    as
    1. Cemal Eren Arbatlı & Quamrul H. Ashraf & Oded Galor & Marc Klemp, 2015. "Diversity and Conflict," NBER Working Papers 21079, National Bureau of Economic Research, Inc.
    2. Francisco M. Gonzalez, 2005. "Insecure Property and Technological Backwardness," Economic Journal, Royal Economic Society, vol. 115(505), pages 703-721, July.
    3. Cemal Eren Arbatli & Quamrul Ashraf & Oded Galor, 2013. "The Nature of Civil Conflict," Working Papers 2013-15, Brown University, Department of Economics.
    4. Anderton, Charles H. & Carter, John R., 2007. "A Survey of Peace Economics," Handbook of Defense Economics, Elsevier.
    5. Garfinkel, Michelle R. & Skaperdas, Stergios & Syropoulos, Constantinos, 2015. "Trade and insecure resources," Journal of International Economics, Elsevier, vol. 95(1), pages 98-114.
    6. repec:cup:apsrev:v:79:y:1985:i:04:p:943-957_23 is not listed on IDEAS
    7. Garfinkel, M.R. & Skaperdas, S., 2000. "Conflict without Misperceptions or Incomplete Information: how the Future Matters," Papers 99-00-11, California Irvine - School of Social Sciences.
    8. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-921, September.
    9. repec:cup:apsrev:v:87:y:1993:i:01:p:115-132_09 is not listed on IDEAS
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    More about this item

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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